Widgetized Section

Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone

Chavez rejects World Bank oil decision in advance

The Americas Post - That isn't the Exxon Mobil logo on the side of that storage tank

Venezuelan President Hugo Chavez announced on Sunday that his nation will not recognize any decision by a World Bank tribunal in a multibillion-dollar arbitration case against Exxon Mobil Corporation.

Exxon has called Venezuela before the World Bank’s International Center for Settlement of Investment Disputes, or ICSID, demanding $12 billion in compensation for nationalization of the Cerro Negro oil project by Chavez in 2007.

“I tell you now: we will not recognize any decision by ICSID,” Chavez said in a televised speech.   He repeated accusations that the U.S. oil producer has used unfair practices to rob the South American OPEC member of its resources.

“They are immoral … How much could they steal in 50 years? Who would dare launch this madness without any foundation?  They wanted $12 billion. From where?” he said.

“We are not going to bow before imperialism and its tentacles, understand that … They are trying the impossible: to get us to pay them. We are not going to pay them anything.”

Exxon declined to comment.

Some interpreted the statement to mean Venezuela would reject rulings in the 20 other cases pending before the World Bank’s tribunal, responses to multiple state takeovers in recent years.  They include separate multi-billion dollar claims filed by another U.S. oil company, Conoco Phillips.  Two statements issued later however, by Venezuela’s Petroleum and Mining Ministry and by its state oil company PDVSA, only mentioned the Exxon case.

Last week an arbitration panel at the International Chamber of Commerce, awarded Exxon $908 million in a separate case about the Cerro Negro nationalization.  On Saturday, Venezuelan Oil Minister Rafael Ramirez said he did not expect a verdict in Exxon’s World Bank case before the end of this year.

Both cases are being monitored by the industry for precedents in future disputes between companies and producing states, which have demanded a larger share of oil profits as prices increase and new reserves grow scarce.

For years, Venezuela’s socialist president has accused foreign oil companies of looting that nation’s resources, while still maintaining close ties with many of them.

Exxon says the World Bank case is to compensate for its assets, and experts say it could result in a larger award.  The government has insisted Exxon receive only slightly more than the $750 million it said was invested in the project.  In September, Venezuela offered to settle for $1 billion.

For years, Chavez has hit oil companies with tax hikes and contract revisions  to fund public anti-poverty programs.

Venezuela’s push for more control over its oil has been emulated by other producing nations.  Critics say it has scared investors away from that country and reduced production volume.  Regardless, some companies remain eager to invest in Venezuela’s Orinoco extra heavy oil belt, one of the world’s largest untapped reserves of crude.  Chevron and Spain’s Repsol both signed deals in 2010 for new projects there.